Defensible Discovery: More than a Clawback Agreement

In a recent Discovery Order in the matter of Brookfield Asset Management, Inc. v. AIG Financial Products Corp., 2013 WL 142503 (S.D.N.Y. Jan. 7, 2013), Judge Maas held that AIG had the right to claw back its inadvertently produced privileged material regardless of the nature of its production based on the parties’ protective clawback agreement. AIG had produced redacted drafts of Board minutes with metadata containing the otherwise redacted privileged information, and while Judge Maas noted that the discovery efforts made by AIG’s counsel were reasonable, the Court emphasized that the clawback agreement would have protected AIG’s privileged material no matter what:

“[. . . ] even if AIG or its counsel had dropped the ball (which they did not), the parties at my urging had entered into a Rule 502(d) stipulation . . . That stipulation [citation omitted]contains one decretal paragraph, which provides that “Defendants’ production of any documents in this proceeding shall not, for the purposes of this proceeding or any other proceeding in any other court, constitute a waiver by Defendants of any privilege applicable to those documents, including the attorney-client privilege ….“ Accordingly, AIG has the right to claw back the minutes, no matter what the circumstances giving rise to their production were.” Brookfield Asset Management, 2013 WL 142503 at *4.

Despite this Order, counsel should still employ reasonable measures in addition to a well-thought out clawback agreement to ensure that a clients’ privileged communications are not inadvertently disclosed during discovery—counsel cannot rely on all Courts and jurisdictions to rule uniformly with Judge Maas. Discovery counsel would be wise to employ multiple layers of review to minimize the risk of privileged material being inadvertently produced at the start of the discovery process. Below I will outline a multilayer privilege review approach that, in conjunction with a clawback agreement, will serve to protect your client’s privilege on all fronts.

At project outset, counsel should provide the technology vendor with a list of known attorney names and key legal terms to be highlighted throughout the review set. This will enable your review team to more easily identify potentially privileged material. To ensure a thorough review of potentially privileged documents, engage the platform’s hidden data utility tool, which will signal to your review team the existence of hidden data within a document, such as track changes in a Word document or hidden notes in a PowerPoint presentation. This metadata material may then be more highly scrutinized for potentially privileged material.

Further steps in your review should include a quality control check, performed by a subset of review team members, to catch any privileged material that may have been missed during the first level of review. Consider isolating those documents that contain potentially privileged names and/or terms but are not flagged as potentially privileged. These documents should be reviewed again by a member of your quality control team.

The final step in your quality control review should be to again run the names of all known attorneys and key legal terms across the potential production set prior to signing off on the production. Even after production, your quality control efforts should continue. While drafting your privilege log, be on the lookout for additional attorney names, issues, or different iterations of the same document that may not have been apparent at the time of your team’s first level review.

When all of these steps are undertaken and documented, if there is inadvertent disclosure of privilege necessitating claw back, your process is defensible. If opposing counsel objects, the court would be hard-pressed to say that your multi-layered approach was anything less than reasonable.

The proverbial nail in the coffin for any claims of waiver of attorney-client privilege should be the ironclad clawback agreement that trial counsel entered into at the commencement of discovery. Such agreements should encompass rights provided under FRCP 26(b)(5), which include the ability to request that the inadvertently produced privileged material be returned, sequestered or destroyed and otherwise not used in the course of the pending litigation. Rule 26(b)(5) also establishes that such inadvertent disclosure does not waive the attorney-client privilege in the pending litigation.

Together, a defensible review process and clawback agreement can ensure that minimal, if any, privileged documents are produced, and any that are inadvertently produced can be clawed back. Relying on either method without the other may leave the final decision regarding your client’s privileged information in someone else’s hands.

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“The Tanenholz team was charged with reviewing all of our documents, roughly 500,000 pages, developing best practices for record creation, establishing a document hierarchy linking structure to connect the documents based on a number of factors and performing quality control to ensure accuracy of the documents. This project was and remains massive in scope and complexity and the Tanenholz team was diligent, thorough and creative in working through the numerous issues that arose. David was very hands on during the project and bent over backwards to make sure all of our needs were met in the most accurate, efficient way possible.”

Paul MamalianGeneral Counsel & EVPHMSHost

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